The Monday essay: The sale of democracy protects the powerful and silences the rest

By prioritising expediency over thoroughness, the government is squandering an opportunity to implement meaningful change.

The federal government’s proposed reforms to donation laws aim to reshape the financial landscape of Australian politics, but a closer examination reveals significant shortcomings. While the changes might appear progressive on the surface – lowering individual donation thresholds, tightening disclosure timelines, and raising public funding for primary votes – they fall short of delivering the transformative overhaul the political funding system desperately needs. These reforms, at best, represent a cosmetic adjustment to a deeply entrenched problem and, at worst, serve to entrench the dominance of major political parties while marginalising smaller parties and independent candidates.

The most publicised element of the reform package is the reduction in donation thresholds. Under the proposed laws, donations exceeding $1,000 must be disclosed monthly, a dramatic reduction from the current $16,900 threshold with annual reporting. In principle, this change is excellent. Greater transparency in campaign financing is essential to curbing undue influence, and lowering the threshold makes it harder for large donors to obscure their contributions through incremental payments. Yet the reform stops short of real-time disclosure – a glaring omission in an age where digital tools can facilitate instant accountability. Monthly reporting, while an improvement, still allows for strategic manipulation of the rules, such as clustering donations shortly before election day, leaving voters none the wiser until after the polls close.

The legislation also imposes a $20,000 annual donation cap per individual or entity for each candidate and a $600,000 overall limit across the board. Similarly, spending caps of $800,000 per candidate and $90 million per political party will be introduced. These limits seem designed to curb the outsized influence of mega-donors and the arms race of political advertising. However, the scale of these caps still overwhelmingly favours the established major parties, which can command millions in public funding and attract broader networks of smaller contributors. Smaller parties and independents, which already struggle to compete on a national stage, will find these caps suffocating rather than liberating.

The legislation also introduces an increase in public funding, raising it from $3.31 to $5 per primary vote. While this move supposedly reduces dependence on private donations, it still disproportionately benefits larger parties, which can count on a significant share of the vote. This funding model perpetuates the vicious cycle: major parties enjoy greater resources to campaign effectively, securing more votes and more public funding, while smaller players and newcomers remain on the periphery, unable to break through the established duopoly.

The process through which these reforms are being advanced raises other concerns: the bill spans over 220 pages (yes, 220!). The short timeline for its passage leaves little room for thorough scrutiny or debate, and independent and minor party Senators have rightly criticised the government for providing inadequate time to digest the dense legislation. The absence of any resistance at all from Leader of the Opposition Peter Dutton – known for his staunch opposition to government initiatives and reputation for just saying “no” to everything – confirms suspicions that this bill is yet another bipartisan step to cement the dominance of major parties. This rushed process not only undermines democratic accountability but also suggests that hidden clauses within the legislation may contain provisions which are detrimental to smaller players.

If the proposed laws provide a disincentive to political newcomers and constrain the ability of smaller campaigns to fundraise effectively, they contradict the broader objective of fostering a diverse and competitive political ecosystem. A strong and healthy democracy depends on pluralism, not consolidation: the major parties, far from fearing the rise of independents, should recognise that being held to account by diverse perspectives ultimately strengthens governance and makes them better too.

By prioritising the interests of entrenched power structures, the proposed legislation risks exacerbating the very problems it claims to address. The path to meaningful reform requires not just tinkering at the edges but a bold reimagining of how money flows through the political system, ensuring that all voices – not just the loudest – are heard.

How the proposals entrench power and stifle diversity

The legislation’s focus on donation caps and spending limits supposedly aims to level the playing field, but in practice, it will exacerbate existing disparities. The major parties –Labor, Liberal and Nationals – have extensive, entrenched donor networks and access to substantial public funding streams, ensuring they can campaign effectively even with tighter limits. Independent candidates and smaller parties, however, rely heavily on larger, one-off donations or grassroots fundraising drives. By capping individual donations and introducing cumbersome compliance measures, these reforms place additional financial and administrative strain on the very groups that already struggle to compete.

The timing and opacity of the legislative process only heighten these concerns. As the independent member for Warringah Zali Steggall suggested, the lack of an exposure draft and the rushed timeline for parliamentary debate suggests an intentional effort to curtail meaningful scrutiny. The implications are great: Senators and MPs are being denied the opportunity to identify and address the loopholes and unintended consequences of this far-reaching reform. For example, the allowance for donations to reset after each election and the treatment of state branches as separate entities enable parties to effectively bypass caps, preserving their fundraising advantages. These loopholes are not just oversights – they are systemic flaws that disproportionately benefit the two major parties.

The legislation’s delayed implementation, set for 2026, also removes any urgency for such an expedited process, so why is there such a big rush? By rushing this through Parliament without adequate examination, the government – and the opposition – is hoping that the legislation is enshrined before the broader electorate can fully grasp its implications. The delay also conveniently shifts the focus away from immediate accountability, kicking the can down the road while entrenching structural advantages for the next electoral cycle.

The reforms also reveal a broader strategy to stymie political movements that have recently gained traction. High-profile independent campaigns and groups such as Climate 200, which challenge the status quo through their support of the teal independents movement, represent a growing appetite among voters for alternatives to the major parties. Similarly, figures such as Clive Palmer, whose massive outlays of over $200 million to the United Australia Party over the past two federal elections have reshaped campaign dynamics, are clear targets of these changes. Yet while Palmer’s influence may be curtailed, the same restrictions apply to grassroots-funded independents, further consolidating the power of the entrenched two-party system.

While it might be politically unpalatable at this stage, a more equitable solution would involve fully publicly funded elections, where campaigns are financed through capped public funding rather than private donations. Such a system would eliminate the undue influence of wealthy individuals and organisations, ensuring that political campaigns focus on ideas rather than fundraising abilities. While the major parties may argue that these reforms are a step toward fairness, their unwillingness to embrace full publicly funded elections reveals their true priorities: preserving their financial and structural dominance at the expense of democratic diversity.

The missed opportunity in real-time transparency

The disclosure component of the proposed reforms, while a marginal improvement over the current system, remains deeply disappointing. Transparency in political donations is a central component of democratic accountability, yet the proposed changes fail to deliver the level of immediacy and clarity necessary for the public to trust that private money is not unduly influencing legislation and electoral outcomes. While moving from annual to monthly disclosure with a 21-day delay is a step forward, it is still a long way from the real-time transparency that modern technology makes entirely feasible.

Real-time donation disclosure is not a utopian ideal; it is a practical necessity in an age of instantaneous communication and digital record-keeping. This ensures that voters can see who is funding candidates and political campaigns, as critical legislative debates and election cycles unfold. Australia lags behind in this area, choosing instead to embrace half-measures that allow significant delays in public knowledge. This creates a vacuum of accountability during the moments it is most needed – when major legislation is being debated or when voters are heading to the polls.

The failure to implement real-time disclosure is particularly glaring given the resources and time available to the government. With nearly three years to prepare this legislation, there was ample opportunity to design and test a centralised online clearinghouse for donations. Such a system could easily log and publish donations in real-time or within a day of receipt. Instead, the government chose to release this legislation in the shadows of this parliamentary term, leaving minimal time for debate or refinement. This lack of urgency and openness raises serious questions about the government’s commitment to genuine reform and suggests a deliberate effort to minimise scrutiny.

The major parties face mounting pressure from independents and smaller parties, particularly in traditionally safe seats: there is no question about this, as shown by the consistent drop in the primary vote for major parties since 1983. Independents have already proven to be formidable challengers in Liberal strongholds, and there is no reason they could not make inroads into Labor’s territory as well. Rather than addressing the legitimate grievances of voters seeking alternatives, the major parties have crafted reforms that insulate their dominance while imposing new hurdles for those attempting to break through.

The Australian Greens also face challenges under this framework. Despite a growing share of the vote, their support is often spread thin across multiple electorates, making it difficult to translate votes into seats. Like independents, they rely on donations to remain competitive, and while their support base is growing, they lack the institutional backers that the major parties enjoy. Labor’s ties to unions, the Liberals’ connections to big business, and the Nationals’ close relationship with the mining sector, provide them with a steady stream of financial support that smaller players simply cannot match. By failing to create a genuinely level playing field, these reforms entrench existing power dynamics and limit the ability of alternative voices to gain traction.

If the Labor government was serious about electoral funding reform, it would be best to reconsider this legislation. Rather than rushing it through an impossible timeframe, the government should delay its implementation until after the next federal election. Delaying the legislation would not only improve its quality but also demonstrate a genuine commitment to democratic accountability rather than the weak optics of reform.

By prioritising expediency over thoroughness, the government is squandering an opportunity to implement meaningful change. If it truly wishes to position itself as a champion of electoral reform, it should resist the temptation to push through flawed legislation and engage in the hard, collaborative work of crafting a system that is fair, transparent, and inclusive. Anything less will serve only to reinforce the perception that the political system is rigged in favour of those already in power.